Q1 2020 Earnings May 2020
Forward-looking statements This document contains forward-looking statements relating to our plans and expectations, all of which are subject to risks and uncertainties. Such statements are based on management’s expectations and assumptions as of the date of this release and involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied in our forward-looking statements including: (1) national and global economic conditions, (2) the continued impact of COVID-19 and related economic impact and governmental response, (3) our ability to successfully reduce operating expenses and otherwise adapt to the changing economic environment caused by COVID–19, (4) our ability to access sufficient capital to finance our operations, including our ability to comply with or obtain waivers for covenants contained in our revolving credit facility, (5) our ability to attract and retain clients, (6) our ability to attract sufficient qualified candidates and employees to meet the needs of our clients, (7) our ability to maintain profit margins, (8) new laws and regulations that could affect our operations or financial results, (9) our ability to successfully execute on business strategies to further digitize our business model, and (10) any reduction or change in tax credits we utilize, including the Work Opportunity Tax Credit. Other information regarding factors that could affect our results is included in our Securities Exchange Commission (SEC) filings, including the company’s most recent reports on Forms 10-K and 10-Q, copies of which may be obtained by visiting our website at www.trueblue.com under the Investor Relations section or the SEC’s website at www.sec.gov. We assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law. Any other references to future financial estimates are included for informational purposes only and subject to risk factors discussed in our most recent filings with the SEC. In addition, we use several non-GAAP financial measures when presenting our financial results in this document. Please refer to the reconciliations between our GAAP and non-GAAP financial measures in the appendix to this presentation and on our website at www.trueblue.com under the Investor Relations section for additional information on both current and historical periods. The presentation of these non-GAAP financial measures is used to enhance the understanding of certain aspects of our financial performance. It is not meant to be considered in isolation, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with U.S. GAAP, and may not be comparable to similarly titled measures of other companies. Any comparisons made herein to other periods are based on a comparison to the same period in the prior year unless otherwise stated. www.TrueBlue.com 2
Q1 2020 summary Q1 results below low-end of company outlook ▪ Underperformance due to COVID-19 disruption that began in March ▪ Total revenue -11% v. outlook of -9% to -4% Net loss of $150 million, or $(4.04) per share, included a non-cash impairment charge 1 of $152 ▪ million after tax, or $(4.08) per share. Adjusted EPS 2 $(0.01) v. outlook of $0.04 to $0.11 ▪ Strong cash position and cost management ▪ $265 million of cash on the balance sheet at the end of Q1 2020 ▪ Extended our existing $300 million revolving credit facility for five years and drew substantially all of the remaining availability ▪ Executed a $40 million accelerated share repurchase (ASR) and bought $12 million of shares on the open market in February 2020, for a combined total of $52 million 3 ▪ Cost-cutting actions expected to result in fiscal year savings of approximately $100 million Leveraging digital strategy JobStack TM is helping us safely connect people with work during this time of crisis ▪ 785,000 shifts filled via JobStack in Q1 2020, representing an all-time high digital fill rate 4 of 51% ▪ ▪ 23,500 client users, up more than 50% compared to Q1 2019 1 Pre-tax impairment of $175.2 million includes $140.5 million for goodwill, $94.6 million in PeopleScout and $45.9 million in PeopleManagement, as well as $34.7 million for client relationship intangible assets, $25.0 million in PeopleScout and $9.7 million in PeopleManagement, driven by customer volume reductions tied to the recent economic conditions. 2 See the appendix to this presentation and “Financial Information” in the investors section of our website at www.trueblue.com for a definition and full reconciliation of non-GAAP financial measures to GAAP financial results. 3 Cash settlement for the full $52 million occurred in Q1 2020. However, with regard to the $40M ASR, $32M of impact was reflected in our outstanding share count in Q1 and the remaining $8M will be reflected in Q3. These transactions were conducted prior to the medical community’s acknowledgment of the expected severity that COVID-19 would have on the United States. www.TrueBlue.com 3 4 Represents orders filled via JobStack (calculation excludes unfilled orders).
Financial summary Q1 2020 Change Amounts in millions, except per share data Revenue $494 -11% Net Loss -$150.5 NM Net Loss Per Diluted Share -$4.04 NM Adjusted Net Loss¹ -$0.3 NM Adj. Net Loss Per Diluted Share -$0.01 NM Adjusted EBITDA¹ $4.6 -73% Adjusted EBITDA Margin 0.9% -210 bps 1 See the appendix to this presentation and “Financial Information” in the investors section of our website at www.trueblue.com for a definition and full reconciliation of non-GAAP financial measures to GAAP financial results. www.TrueBlue.com 4
Revenue trends Total TrueBlue PeopleReady PeopleManagement PeopleScout (3)% (6)% (7)% (8)% Monthly (9)% (8)% (14)% (15)% (18)% (14)% (28)% (16)% Jan. Feb. Mar. Jan. Feb. Mar. PeopleReady PeopleManagement (2)% (6)% (7)% (15)% (7)% Weekly 1 (8)% (28)% (29)% (29)% (30)% (11)% (34)% (20)% (32)% (42)% (47)% (48)% (48)% 3/1 3/8 3/15 3/22 3/29 4/5 4/12 4/19 4/26 Week Ended www.TrueBlue.com 5 * Weekly data is available for our staffing businesses (PeopleReady and PeopleManagment), but not our RPO business (PeopleScout) which bills clients monthly.
Gross margin and SG&A bridges 0.4% 26.6% Gross Margin 1 -0.5% 25.5% -1.0% Workers' comp RPO Q1 2019 Staffing Q1 2020 and ACA 2 Amounts in millions $128 $117 -$11 SG&A Q1 2019 Core business Q1 2020 1 We have made certain reclassifications between cost of services and SG&A expense in the prior year to more accurately reflect the costs of delivering our services. Such reclassifications did not have a significant impact on the company’s gross profit and SG&A expense. 2 Q1 2020 included a $6.3 million benefit from a reduction in expected costs to comply with the Affordable Care Act which were recorded in prior fiscal years. Q1 2019 included a $3.9 million benefit from workers’ compensation related www.TrueBlue.com 6 to additional insurance coverage associated with former workers’ compensation carriers that are in liquidation. These benefits have been excluded from adjusted EBITDA and adjusted net income in both periods.
Q1 2020 results by segment PeopleReady PeopleManagement PeopleScout Amounts in millions Revenue $299 $142 $53 % Growth -8% -10% -21% Segment Profit $8 $0 $3 (Loss) 1 % Growth -33% -114% -76% % Margin 2.6% -0.2% 4.7% Change -100 bps -170 bps -1080 bps ¬ Revenue was -8% v. -9% last ¬ Revenue was -10% v. -7% last ¬ Revenue was -21% v. -18% Notes: quarter quarter last quarter; previously disclosed headwinds ¬ March revenue was -14% ¬ March revenue was -14% contributed to the year-over- ¬ Revenue declined significantly ¬ Revenue declined significantly year declines 2 during the last two weeks of during the last two weeks of ¬ March revenue was -28% March due to COVID-19; retail March due to COVID-19; food and energy fared best while processors fared best while ¬ Results were adversely hospitality was weaker automotive was weaker impacted by COVID-19 beginning in March; healthcare fared best while travel related industries were weaker 1 We evaluate performance based on segment revenue and segment profit (loss). Segment profit (loss) includes revenue, related cost of services, and ongoing operating expenses directly attributable to the reportable segment. Segment profit (loss) excludes goodwill and intangible impairment charges, depreciation and amortization expense, unallocated corporate general and administrative expense, interest, other income and expense, income taxes, and other adjustments not considered to be ongoing. www.TrueBlue.com 7 2 PeopleScout headwind primarily from lower volume on a large industrial account (-8% revenue growth headwind in Q1 2020 v. -11% Q4 2019). Associated segment profit headwind of approximately $3M (-25% segment profit growth headwind in Q1 2020).
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